That's a cool experiment. It's always neat to see people trying new, weird ways to run a company.
That said, I would predict the following:
- As the company grows, they have trouble hiring specialists or more senior people, since they're competing with other companies for those people, but without the flexibility to offer a comparable salary. They could solve this by paying their highest-paid person what they're worth, and everyone else the same, but that could be prohibitively expensive.
- The need will develop for people who, though valuable, are plentiful (eg, a janitor, but fill in any role here that's generally near the bottom of the pay scale). The decision will be "We'd really like a janitor, but not enough to pay $X", where X is their everyone-salary (which has to be high enough to attract their most valuable people). As such, they'll be hard-pressed to hire roles that aren't really worth that much to them.
Of course, you can solve either of those by having more money than you know what to do with. So, if they're wildly profitable, it's a system that'll keep working.
That's just my prediction, though. I'd love to see a followup blog post in a few years describing how it went.
They might be able to get around the janitor etc problem by hiring a janitorial service company to do it instead of a full time person. This would work for many positions including both bottom of the pay scale and top. E.g. at the top of the pay scale you could contract a consultant to do an in-depth performance/security profile and recommendation report instead of hiring an expert directly.
On the issue of talent pool we have another experiment going. We don't require anyone to work from our office, work from wherever you feel like. I'll blog about that next but to answer your question, it has an extremely positive effect on hiring highly skilled people.
Amazing! I assume it works because everyone is in the same overall ballpark of skills/experience (maybe within a factor of two or something). If you were a law firm and had 60 year old gray beards as well as young interns straight out of school I could see it being a lot more difficult to pull off.
They are one bozzo away from the disaster. At small scale it is possible to have great consistency among your hires with everybody doing everything and be super productive. But eventually bozzos starts to creep in. Smart people will start feeling frustrated because they are being valued same as who they consider less optimal, less trained, less experienced or less productive. Person A would loose motivation to go extra mile if s/he feels everybody else aren't. It is one thing not to have bonuses, performance ratings and offer just one flat salary but its quite another to offer same salary to everyone.
Looking at the "about us" page the company has 8 employees. Six of them seem to be either executive level or skilled technical employees who possibly would earn similar salaries anyway. Then there's two that seem, from the description, to be what I would consider more general-skilled employees. My takeaway is that this strategy results in two employees making an unusually high salary for their position, while the founder/owners are probably taking less money than they could. Assuming there aren't some secret bonuses or stock options I'd say it seems generous on the part of the owners.
That being said I think this idea is not too far off from communism which can tend to reward people for doing the bare minimum. So I would think it would rely on the fact that everybody at the company has the desire to work hard and contribute a similar amount of effort. Otherwise eventually some people will become angry that their hard work is not worth any more than somebody else's lazy habits.
Do they all own the same amounts of equity in the company, as well? Or, in the case of a sale someday, do two of those guys get rich and the others find themselves having worked for lower-than-average salary for all those years in the name of "fairness to all".
They tried this on a rather large scale in USSR, it was called "from each according to his ability, to each according to his need". The results... weren't that great.
I get the reasoning behind it, but I wonder how it affects hiring/retention.
That's a cool experiment. It's always neat to see people trying new, weird ways to run a company.
That said, I would predict the following:
- As the company grows, they have trouble hiring specialists or more senior people, since they're competing with other companies for those people, but without the flexibility to offer a comparable salary. They could solve this by paying their highest-paid person what they're worth, and everyone else the same, but that could be prohibitively expensive.
- The need will develop for people who, though valuable, are plentiful (eg, a janitor, but fill in any role here that's generally near the bottom of the pay scale). The decision will be "We'd really like a janitor, but not enough to pay $X", where X is their everyone-salary (which has to be high enough to attract their most valuable people). As such, they'll be hard-pressed to hire roles that aren't really worth that much to them.
Of course, you can solve either of those by having more money than you know what to do with. So, if they're wildly profitable, it's a system that'll keep working.
That's just my prediction, though. I'd love to see a followup blog post in a few years describing how it went.
Janitorial work and the like can be outsourced.
They might be able to get around the janitor etc problem by hiring a janitorial service company to do it instead of a full time person. This would work for many positions including both bottom of the pay scale and top. E.g. at the top of the pay scale you could contract a consultant to do an in-depth performance/security profile and recommendation report instead of hiring an expert directly.
On the issue of talent pool we have another experiment going. We don't require anyone to work from our office, work from wherever you feel like. I'll blog about that next but to answer your question, it has an extremely positive effect on hiring highly skilled people.
Amazing! I assume it works because everyone is in the same overall ballpark of skills/experience (maybe within a factor of two or something). If you were a law firm and had 60 year old gray beards as well as young interns straight out of school I could see it being a lot more difficult to pull off.
these guys are so brilliant. Yes, I use them to host all my domains.
They are one bozzo away from the disaster. At small scale it is possible to have great consistency among your hires with everybody doing everything and be super productive. But eventually bozzos starts to creep in. Smart people will start feeling frustrated because they are being valued same as who they consider less optimal, less trained, less experienced or less productive. Person A would loose motivation to go extra mile if s/he feels everybody else aren't. It is one thing not to have bonuses, performance ratings and offer just one flat salary but its quite another to offer same salary to everyone.
It's certainly an experiment. We'll see how it goes.
Looking at the "about us" page the company has 8 employees. Six of them seem to be either executive level or skilled technical employees who possibly would earn similar salaries anyway. Then there's two that seem, from the description, to be what I would consider more general-skilled employees. My takeaway is that this strategy results in two employees making an unusually high salary for their position, while the founder/owners are probably taking less money than they could. Assuming there aren't some secret bonuses or stock options I'd say it seems generous on the part of the owners.
That being said I think this idea is not too far off from communism which can tend to reward people for doing the bare minimum. So I would think it would rely on the fact that everybody at the company has the desire to work hard and contribute a similar amount of effort. Otherwise eventually some people will become angry that their hard work is not worth any more than somebody else's lazy habits.
Do they all own the same amounts of equity in the company, as well? Or, in the case of a sale someday, do two of those guys get rich and the others find themselves having worked for lower-than-average salary for all those years in the name of "fairness to all".
They tried this on a rather large scale in USSR, it was called "from each according to his ability, to each according to his need". The results... weren't that great.